Cabot Prime Week Ending October 15, 2021
Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.
Cabot Weekly Review (Video)
In this week’s stock market video, Mike Cintolo discusses the solid rebound in the market and individual stocks, with some names actually rebounding all the way back to new highs. That said, the move hasn’t been enough to turn the trend back up, so Mike is sticking with a cautious stance, but he has his watch list in order in case the rally confirms itself on the upside next week.
UPCOMING CABOT EVENTS:
3 Stocks to Play the Coming American Solar Boom
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Cabot Retirement Club Member Call
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Advisory Services
Cabot Growth Investor
Bi-weekly Update October 14: Remain cautious, but don’t ignore the action of individual stocks. Our Cabot Tides remain negative (neutral at best), but as opposed to much of this year, growth stocks are showing great strength. We still mostly favor staying close to shore, as the market correction could have further to go. But today we’re going to buy a half-sized position in Ambarella (AMBA), which we think is a leading glamour name. That will leave us with around 38% in cash. Details below. We’re also restoring our Buy rating on Cloudflare (NET).
Bi-weekly Issue October 7: We’re now about a month into this market correction, which to this point has been relatively garden-variety—from the high in early September to its low earlier this week, the S&P 500 slipped 5.9%, while growth-oriented indexes did a bit worse (Russell 2000 Growth down 7%, Nasdaq down as much as 8%, etc.). And individual stocks are in a similar boat, with many cracking intermediate-term support but few showing any longer-term abnormal action.
Cabot Top Ten Trader
Movers & Shakers October 15: Last week’s market bounce was encouraging but inconclusive—the major indexes rallied at a key level, and many leading (and potential leading) stocks did the same. That said, at best, most things were still stuck in neutral, with few names really powering ahead and the indexes still in intermediate-term downtrends.
Weekly Issue October 11: In true 2021 fashion, just when the market looked ready to go over the falls last week the buyers stepped in, pushing the major indexes sharply higher (recouping nearly 50% of the month-long correction in just three days and seeing many individual stocks pop as well). Mike’s Top Pick is LPL Financial (LPLA), which won’t be your fastest mover but has staged a good-looking breakout in recent weeks.
Cabot Undervalued Stocks Advisor
Weekly Update October 13: The U.S. economy is currently in an early inflation stage. Inflation appears localized in specific assets and products, including housing, energy and other cyclical commodities, entry-level wages, cars, and some food products. As long as inflation remains constrained to relatively narrow categories, there is probably limited incremental risk to a portfolio’s long-term purchasing power. Investors can adapt by buying shares of companies that directly benefit from this inflation.
Monthly Issue October 6: Official inflation numbers are, of course, starting to rise quickly. The August CPI increased 5.3% from a year ago (even as the housing component continues to significantly understate inflation). Curiously, major appliance makers are curtailing production of their lower-priced models to prioritize their more expensive and higher-margin models – this won’t be good for keeping inflation rates low.
Cabot Stock of the Week
Weekly Issue October 11: Long-term market trends remain positive, but short-term trends have become troubling in recent weeks (last week we sold three stocks). Tim’s featured stock Veeco Instruments (VECO), is a play on this middle-leg market as an American high-quality provider of state-of-the-art semiconductor fabrication equipment. The company delivers the leading-edge technology to U.S.-based and international high-end-class chipmakers, some of which are 100% reliant on Veeco technology to deliver the next-generation chips.
Cabot Explorer
Bi-weekly Issue October 14: A country’s brand is largely framed by the perception of its people, power, reliability and influence. This perception can be just as important as a country’s real economic and military power. In short, a country’s brand largely reflects a country’s character. Carl’s new recommendation Bombardier Inc. (BDRBF), is a global leader in aviation with a niche in private and corporate markets, and is making a splash at this week’s aviation show in Las Vegas. It provides world-class products in passenger comfort, energy efficiency, reliability and safety.
Bi-weekly Update October 7: U.S. crude oil hit a seven-year high as stocks, especially tech stocks, face headwinds. Today I am moving dominator Taiwan Semiconductor (TSM) to a Sell as Taiwan, America, China and Japan play a dangerous game. China sent 52 warplanes into the islands air buffer zone after the U.S. and allies held exercises nearby.
Cabot Dividend Investor
Monthly Issue October 13: Tom’s featured stock Compass Diversified (CODI), is a holding company that invests in niche middle-market businesses, a segment historically reserved for traditional private equity. It owns ten companies, six in branded consumer businesses and four niche industrial companies. The businesses are unrelated and therefore provide diversification. The branded businesses include companies that make and sell outdoor wear, food warming systems, baseball equipment, diamonds, and baby products. The industrial businesses make circuit boards, magnetic technologies, and custom packaging.
Weekly Update October 6: September was ugly. The S&P 500 fell 4.8% for the month. But that month is over. Now we are in what is only the second worst month of the year historically. So far, October has been volatile. There have been strong rallies that quickly become undone in the following days. The market is still even for the month, but it looks very unsteady. It’s not inspiring a lot of confidence. It can’t take another bad headline.
Cabot Marijuana Investor
Update October 13: The good news is that the marijuana industry is growing rapidly, with the leading companies continuing with their programs of store openings and acquisitions. The bad news is that the stocks of these leading companies remain in correction mode, as they have been since February.
Monthly Issue September 29: Since the marijuana sector peaked in February, the Global Cannabis Stock Index has lost 50% of its value. That’s the cost of investing in hot young growth industries. But the fundamentals of the industry remain exceedingly attractive, so there’s no question that eventually, this long slow bottoming process will give way to a new uptrend. In the meantime, our dual focus on the leading companies in the industry (measured by revenues and earnings) and the strongest stocks in the sector (measured by chart strength) will keep us in the stocks that are most likely to lead the next advance.
Cabot Early Opportunities
Special Bulletin October 8: We jumped into Bellring Brands (BRBR) as a trade in September and the stock has slid since. It’s down less than 10%, but the trajectory is clearly not working in our favor and I’m not going to let a trade attempt turn into something significant. We’re moving on. Sell
Special Bulletin October 4: We’re seeing the ugly action from last week continue today so we’ll take a few steps to protect some of our hard fought profits. Here are today’s suggested actions: Sell Bentley Systems (BSY). We’ve held the stock since April and still have a 16% profit, even after the recent retreat. With shares falling through 60 today we’ll walk away and put BSY back on the watch list.
Monthly Issue September 15: From Tyler’s perspective growth has been where it’s at lately. We all tend to focus on what’s right in front of us, but even when flipping through dozens of charts of other types of stocks lately it seems like those that are working the best are the ones growing the fastest. In particular, software and rapid growth IPO stocks have been on fire. Case in point is Upstart (UPST), which is up 126% for us in just two months.
Cabot Profit Booster
Update October 15: Today is the expiration of October options and three of our positions will likely expire for profits. The details are below, but the headline is we are simply going to let these situations play themselves out today, and then will revisit where we stand Monday/Tuesday of next week.
Weekly Issue October 12: The three leading indexes pushed higher this past week as the S&P 500 rose 0.78%, the Dow gained 1.22%, and the Nasdaq added 0.08%. Following a choppy and volatile start to the week, on Thursday politicians kicked the debt-ceiling can down the road, which seemed to make investors happy, at least for the day. Unfortunately, that investor excitement was short-lived as the September jobs report on Friday came in at 194,000 new jobs added, well under the expectation of 500,000. The market managed to close Friday only slightly lower despite the bad news. Jacob’s new stock recommendation is Builders FirstSource (BLDR).
Cabot Income Advisor
Weekly Update October 13: So far, October looks better than September for the market. After falling 4.8% in September, the worst month since the pandemic recovery began, the S&P 500 is up slightly for October. But we might not be out of the woods yet. Much will depend on earnings this quarter. Earnings have been spectacular throughout the pandemic recovery and have propelled the market higher. But things are less certain this quarter.
Special Bulletin September 24: Trade Alert: Sell USB November 19th $60 calls at $2.30 or better.
Monthly Issue September 22: The dicey market prognosis creates two issues for the portfolio. One is that it isn’t a great time to buy anything. Stocks aren’t down much yet and the near future looks bleak. The other issue is that the recent downward bias has shrunken call premiums, as less investors are willing to bet on higher prices. Tom’s featured stock AGNC Investment Corp. (AGNC), is a mortgage real estate investment trust that invests predominantly in U.S. Government-backed residential mortgages. It pays a very high dividend yield and makes payments on a monthly basis.
Cabot Turnaround Letter
Weekly Update October 15: This week’s update includes our comments on earnings from Walgreens Boots Alliance (WBA) and Wells Fargo & Company (WFC) as well as commentary on several stocks. Next week, Baker Hughes (BKR), Mattel (MAT), Dril-Quip (DRQ) and Xerox (XRX) are scheduled to report earnings.
Monthly Issue September 29: Most investors, and the general public, seem to regard the transportation industry as somewhat dull. No doubt, there is little inspiration that comes from waiting at airports, driving in city traffic, or watching delivery trucks start-n-stop their way through neighborhoods. Bruce’s has one buy recommendation: TreeHouse Foods, Inc. (THS). TreeHouse Foods is one of the nation’s largest independent private label food manufacturers.
Ask the Experts
Cabot Undervalued Stocks Advisor
Question: I wanted to get your views on Barrick over Newmont. On the surface, it would seem Newmont might be the better value (similar decline in price; strong, disciplined management; better dividend) plus, more of their assets in developed countries which have a longer history of property protection. But I’m sure I’m missing something?
Bruce: Short answer: Barrick is higher-risk but higher potential return, Newmont is safer, but in the end their shares likely will perform fairly similarly. Barrick initially attracted my attention in early 2019, and I put it in the Cabot Turnaround Letter (at the time, just “The Turnaround Letter”) at about $13. Liked the new leadership via the deal with Randgold, huge debt paydown to almost zero net debt over the prior 5 or so years, and commodity gold prices looked too low at around $1300/oz. Sold Barrick at $26 in late 2020.
Still like the ‘change’ story at Barrick, as there is more optionality for fundamental improvements, gold production growth, portfolio changes vs Newmont that seems more plug-n-chug. Also, GOLD trades at a perhaps 10% discount to NEM on EV/EBITDA (NAV is very subject but I’d estimate roughly similar discount) - while not a huge difference it is on the right side of the valence.
You’re right that Barrick has more geo risk - much of their production is in African countries (and PNG) with govts that may get (or already have) sticky fingers. Newmont has some decent mines in Ghana but that country seems a bit more stable than Barrick’s average African country. The land-grab trend is getting worse globally and things like the recent coup in Guinea only add to the legitimate worries. Newmont clearly has the safety edge although Guinea is only two doors down from Ghana on Africa’s west coast so Newmont may not be immune. South America would seem a more remote expropriation risk but both countries have sizeable assets there and governments are slipping populist/leftward there, too.
Both have near-zero net debt and generate decent FCF. Barrick’s lower recurring dividend gives them more financial flexibility than Newmont - which can be good or bad depending on what they do with it.
Barrick’s recurring dividend yield is lower at 1.8% (to NEM’s 3.8%) but their specials lift this year’s yield to 3.8%, matching NEM and there is upside for more next year. Barrick’s specials offer higher risk-higher return as they have made no commitments for specials beyond 2021 and may decide to do something else with the cash - like make an acquisition. It’s no secret that Barrick yearns to buy Newmont but this seems unlikely to happen, so they may buy mines or companies here and there. Canada has some up-n-coming mining companies that are likely attracting Barrick’s attention.
Quarterly Cabot Analyst Meeting
The recording of the Cabot Prime Members Meeting with the Analysts from July 14, 2021 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime member benefits.
Stock Recommendations Tracker
The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.
| Stock | Cabot Explorer | Cabot Growth Investor | Cabot Marijuana Investor | Cabot Stock of the Week | Cabot Undervalued Stock Advisor | Cabot Dividend Investor |
|---|---|---|---|---|---|---|
| ABBV | Buy | |||||
| AGNC | Buy | |||||
| AMBA | Buy | Buy | ||||
| ARCO | Buy | |||||
| ASAN | Buy a 1/2 | |||||
| ASML | Sold | |||||
| AVGO | Buy | Buy | ||||
| AVVIY | Buy | |||||
| BABYF | Buy | |||||
| BDRBF | Buy | |||||
| BIP | Hold | Hold | ||||
| BMY | Buy | |||||
| CCHWF | See Advisory | |||||
| CGC | See Advisory | |||||
| CHPT | Buy a 1/2 | Sold | ||||
| CII | Hold | |||||
| CODI | Buy | |||||
| COP | Buy | Buy | ||||
| CRLBF | See Advisory | |||||
| CSCO | Buy | Buy | ||||
| CURLF | See Advisory | |||||
| CVX | Buy | |||||
| DOW | Buy | |||||
| DT | Buy | |||||
| DVN | Buy | |||||
| DXCM | Buy | |||||
| EPD | Buy | |||||
| FND | Buy | Hold | ||||
| FSR | Buy a 1/2 | |||||
| GKOS | Buy | |||||
| GLBE | Sell | |||||
| GM | Buy | Buy | ||||
| GOLD | Buy | |||||
| GRWG | See Advisory | |||||
| GTBIF | See Advisory | |||||
| HUBS | Hold | |||||
| IBM | Sell | |||||
| IIPR | See Advisory | |||||
| JUSHF | See Advisory | |||||
| KKR | Hold | |||||
| KO | Buy | |||||
| LLY | Hold | |||||
| MRK | Buy | |||||
| MRVL | Buy a 1/2 | Buy | ||||
| NEE | Buy | Buy | ||||
| NET | Hold a 1/2 | Buy | ||||
| NVDA | Sold | |||||
| NVNXF | Buy a 1/2 | |||||
| O | Hold | |||||
| OGN | Buy | |||||
| OKE | Buy | |||||
| OTTR | Sell | |||||
| PGX | Hold | |||||
| PLTR | Hold | |||||
| QCOM | Buy | |||||
| SE | Buy a 1/2 | Hold | ||||
| SIG | Buy | |||||
| SPB | Buy | |||||
| SPCE | Hold a 1/2 | |||||
| SSO | Hold 1/2 | |||||
| ST | Buy | Buy | ||||
| STAG | Hold | |||||
| TAP | Buy | |||||
| TCNNF | See Advisory | |||||
| TPB | See Advisory | |||||
| TRSSF | See Advisory | |||||
| TSLA | Hold | |||||
| TSM | Sold | |||||
| USB | Buy | Buy | ||||
| VECO | Buy a 1/2 | Buy | ||||
| VLO | Buy | |||||
| VZ | Hold | |||||
| XEL | Buy |